Wharf Rises on Ocean Terminal Lease Extension: Hong Kong Mover

June 5 (Bloomberg) -- Wharf Holdings Ltd. rose in Hong Kong
trading after saying it has accepted the city state government’s
offer to renew the lease for a shopping and office complex in
one of the city’s biggest tourist districts.

The Hong Kong-based landlord rose as much as 5.1 percent
and was trading 2.7 percent higher at HK$40.25 as of 2:33 p.m.
local time. Its parent Wheelock & Co. rose 2.2 percent to
HK$23.75. The government has re-granted the lease for the Ocean
Terminal in the Tsim Sha Tsui district to Wharf for 21 years,
according to a statement filed to Hong Kong’s stock exchange
today.

Hong Kong’s retail rents have surged in the last decade,
fueled by mainland Chinese shoppers seeking tax-free luxury
fashion and accessory brands. Shares of Wharf, which also owns
the Times Square shopping mall in the city’s Causeway Bay
district, have almost doubled since early 2009.

“A longer tenor gives more certainty,” Nicole Wong and
Susanna Leung, analysts at CLSA Asia-Pacific Markets, wrote in a
report today. “The deal means the company will continue to hold
the largest mall in the city for another 21 years and will allow
it to enhance diversity of its tenant mix, boosting rental
income.”

Wharf will pay HK$7.9 billion ($1.02 billion) in land
premium and an annual rent of 3 percent of the “rateable”
value of the Ocean Terminal lot, it said in today’s statement.

Wharf made about HK$701 million in pretax rental income
from the Ocean Terminal complex, with maximum gross area of
85,700 square meters (922,467 square feet), the company said.
The building is adjacent to Harbour City, an office and mall
complex owned by Wharf.